UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

(Amendment No.1)

x   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended March 31, 2018

¨   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission file number: 001-38426

SENMIAO TECHNOLOGY LIMITED

(Exact name of registrant as specified in its charter)  

Nevada	35-2600898
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

16F, Shihao Square, Middle Jiannan Blvd. High-Tech Zone, Chengdu Sichuan, People's Republic of China	610000
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number: +86 28 61554399

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class:	Name of Each Exchange on Which Registered:
Common Stock, par value $0.0001 per share	The NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ¨    No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes ¨    No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x    No ¨ 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x    No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  Yes x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer x	Smaller reporting company x
	Emerging growth company x

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ¨    No x

As of September 29, 2017, the last business day of the registrant's most recently completed second fiscal quarter, there was no established public market for the registrant’s common stock and, therefore, the registrant cannot calculate the aggregate market value of its voting and non-voting common stock held by non-affiliates as of such date. The aggregate market value of the voting and non-voting common stock held by non-affiliates computed by reference to the price at which the common stock was last sold as of June 28, 2018, was approximately $78,424,525. Common stock held by each officer and director and by each person known to the registrant who owned 10% or more of the outstanding voting and non-voting common stock have been excluded in that such persons may be deemed to be affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of June 28, 2018, there were 25,879,400 shares of common stock, par value $0.0001 per share, of the registrant issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference, briefly describe them and identify the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (i) any annual report to security holders; (ii) any proxy or information statement; and (iii) any prospectus filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 (the "Securities Act"). The listed documents should be clearly described for identification purposes (e.g. annual reports to security holders for fiscal year ended December 24, 1980): None

 EXPLANATORY NOTE

Senmiao Technology Limited (the “Company”) is filing this Amendment No. 1 (the “Amendment”) to the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 (the “Original 10-K”), which was originally filed with the Securities and Exchange Commission (the “SEC”) on June 29, 2018 (the “Original Filing Date”), in order to correct a clerical error in the financial statements included in the Original 10-K.

Specifically, the Company is amending the amount of general and administrative expenses for the year ended March 31, 2017 from $99,550 to $0 in Note 15 to the Consolidated Financial Statements in the Original 10-K.

Except for the amendment described above, this Amendment does not modify or update other disclosures in, or exhibits to, the Original 10-K, and, accordingly, this Amendment should be read in conjunction with the Original 10-K.

Readers are cautioned that information contained in this Amendment is only current as of the Original Filing Date; therefore, to obtain more current information regarding the Company, readers are advised to review the Company’s subsequent filings with the SEC.

As a result of the Amendment, the certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as filed as exhibits to the Original 10-K, have been re-executed and re-filed as of the date of this Amendment.

2 

SENMIAO TECHNOLOGY LIMITED

TABLE OF CONTENTS

		PAGE
PART II
Item 8.	Financial Statements and Supplementary Data	4
PART IV		5
Item 15.	Exhibits and Financial Statement Schedules	5

3 

Item 8. Financial Statements and Supplementary Data

The financial statements required by this item begin on page F-1 hereof.

Index to Financial Statements

Reports of Independent Registered Public Accounting Firms	F-1 and F-2
Financial Statements:
Consolidated Balance Sheets as of March 31, 2018 and March 31, 2017	F-3
Consolidated Statement of Operations and Comprehensive Loss for the Years Ended March 31, 2018 and 2017	F-4
Consolidated Statement of Changes in Stockholders' Equity for the Years Ended March 31, 2018 and 2017	F-5
Consolidated Statement of Cash Flows for the Years Ended March 31, 2018	F-6
Notes to Consolidated Financial Statements	F-7

4 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Senmiao Technology Limited

We have audited the accompanying consolidated balance sheet of Senmiao Technology Limited (the “Company”) as of March 31, 2018 and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the year ended March 31, 2018 and the related notes (collectively referred to as the financial statements). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Senmiao Technology Limited as of March 31, 2018, and the results of their operations and their cash flow for the year ended March 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

/s/ Friedman LLP

We have served as the Company’s auditor since 2018.

New York, New York

June 29, 2018

 

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors

SENMIAO TECHNOLOGY LIMITED

We have audited the accompanying consolidated balance sheets of SENMIAO TECHNOLOGY LIMITED (the “Company”) as of March 31, 2017, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash flows for the year ended March 31, 2017, and the related notes (collectively referred to as the “consolidated financial statements”). These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company was not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits include examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. Our audits also include assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of March 31, 2017, and the results of its operations and its cash flows for the year ended March 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 3 to the consolidated financial statements, the consolidated financial statements for the year ended March 31, 2017 have been restated to correct misstatements.

/s/ ZH CPA LLP

Vancouver, Canada

September 28, 2017, except for the effects of the reverse stock split in Note 1 and Note 11 and inclusion of Parent- Only Financials in Note 15 as to which the date is January 29, 2018.

F-2

SENMIAO TECHNOLOGY LIMITED

CONSOLIDATED BALANCE SHEETS

As of March 31, 2018 and 2017

(Expressed in U.S. dollar, except for the number of shares)

	March 31, 2018			March 31, 2017
					(Restated)
ASSETS
Current Assets
Cash and cash equivalents	$	11,141,566		$	161,292
Prepayments, receivables and other assets		70,421			19,476
Total Current Assets		11,211,987			180,768
Property and equipment, net		8,872			4,648
Other Assets
Intangible assets, net		1,953,223			4,237,451
Goodwill		-			5,631,819
Escrow receivable		1,200,000			-
Total Assets	$	14,374,082		$	10,054,686
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accrued expenses and other liabilities	$	404,604		$	90,256
Due to stockholders		1,090,808			333,761
Total Liabilities		1,495,412			424,017
Commitments and Contingencies
Stockholders' Equity
Common stock (par value $0.0001 per share, 100,000,000 shares authorized; 25,879,400 and 20,250,000 shares issued and outstanding at March 31, 2018 and 2017, respectively)*		2,588			2,025
Additional Paid-in capital		23,611,512			11,359,103
Accumulated deficit		(10,481,669	)		(622,697	)
Accumulated other comprehensive loss		(253,761	)		(1,107,762	)
Total Equity		12,878,670			9,630,669
Total Liabilities and Stockholders’ Equity	$	14,374,082		$	10,054,686

* Giving retroactive effect for 1 for 2 reverse stock split effected on January 29, 2018.

The accompanying notes are an integral part of the consolidated financial statements

F-3

SENMIAO TECHNOLOGY LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the years ended March 31, 2018 and 2017

(Expressed in U.S. dollar, except for the number of shares)

	For the Years Ended March 31,
	2018			2017
				(Restated)
Revenues	$	494,897		$	73,237
Gross revenues		494,897			73,237
Operating expenses
Selling, general and administrative expenses		(1,517,804	)		(258,772	)
Amortization of intangible assets		(659,558	)		(324,710	)
Impairments of intangible assets and goodwill		(8,179,381	)		-
Total operating expenses		(10,356,743	)		(583,482	)
Loss from operations		(9,861,846	)		(510,245	)
Other income, net		2,874			476
Loss before income taxes		(9,858,972	)		(509,769	)
Income tax expense		-			-
Net loss from continuing operations		(9,858,972	)		(509,769	)
Net loss from discontinued operations, net of tax		-			(86,876	)
Net Loss		(9,858,972	)		(596,645	)
Net loss attributable to non-controlling interest		-			(8,763	)
Net loss attributable to Senmiao Technology Limited	$	(9,858,972	)	$	(587,882	)
Net loss attributable to Senmiao Technology Limited from continuing operations	$	(9,858,972	)	$	(509,769	)
Net loss attributable to Senmiao Technology Limited from discontinued operations		-			(78,113	)
Net loss attributable to non-controlling interest		-			(8,763	)
Other comprehensive income (loss)
Foreign currency translation adjustment		854,001			(807,024	)
Comprehensive Loss		(9,004,971	)		(1,403,669	)
Less: comprehensive loss attributable to non-controlling interest		-			(214,165	)
Comprehensive loss attributable to Senmiao Technology Limited		(9,004,971	)		(1,189,504	)
Comprehensive income attributable to Senmiao Technology Limited from discontinued operations		-			2,214
Comprehensive loss attributable to Senmiao Technology Limited from continuing operations	$	(9,004,971	)	$	(1,191,718	)
Weighted average number of common stock
Basic*		21,967,776			20,250,000
Diluted*		21,967,776			20,250,000
Loss per share
Basic and diluted loss for the period attributable to the stockholders of the Company*	$	(0.45	)	$	(0.03	)
Loss per share from continuing operations
Basic and diluted loss from continuing operations attributable to the stockholders of the Company*	$	(0.45	)	$	(0.03	)
Loss per share from discontinued operations
Basic and diluted loss from discontinued operations attributable to the stockholder of the Company*	$	-		$	(0.00	)

* Giving retroactive effect for 1 for 2 reverse stock split effected on January 29, 2018.

The accompanying notes are an integral part of the consolidated financial statements

F-4

SENMIAO TECHNOLOGY LIMITED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

For the years ended March 31, 2018 and 2017

(Expressed in U.S. dollar, except for the number of shares)

											Accumulated
					Additional						other
					Paid-in			Accumulated			comprehensive			Non-controlling
	Common stock				capital			deficit			loss			interest			Total equity
	Shares*		Par value
Balance as of March 31, 2016		20,250,000	$	2,025	$	11,359,103		$	(34,815	)	$	(506,140	)	$	6,200,699		$	17,020,872
Net loss		-		-		-			(587,882	)		-			(8,763	)		(596,645	)
Foreign currency translation loss		-		-		-			-			(601,622	)		(205,402	)		(807,024	)
Disposal of a subsidiary		-		-		-			-			-			(5,986,534	)		(5,986,534	)
Balance as of March 31, 2017		20,250,000		2,025		11,359,103			(622,697	)		(1,107,762	)		-			9,630,669
Capital restructuring		2,250,000		225		(225	)		-			-			-			-
Issuance of common stock pursuant to initial public offering, net of issuance costs		3,000,000		300		10,735,072			-			-			-			10,735,372
Issuance of common stock pursuant to exercise of underwriter’s over-allotment option		379,400		38		1,517,562			-			-			-			1,517,600
Net loss		-		-		-			(9,858,972	)		-			-			(9,858,972	)
Foreign currency translation gain		-		-		-			-			854,001			-			854,001
Balance as of March 31, 2018		25,879,400	$	2,588	$	23,611,512		$	(10,481,669	)	$	(253,761	)	$	-		$	12,878,670

* Giving retroactive effect for 1 for 2 reverse stock split effected on January 29, 2018.

The accompanying notes are an integral part of the consolidated financial statements

F-5

SENMIAO TECHNOLOGY LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. dollar, except for the number of shares)

	For the Years Ended March 31,
	2018			2017
				(Restated)
Cash Flows from Operating Activities:
Net loss from continuing operations	$	(9,858,972	)	$	(509,769	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation of property and equipment		3,580			961
Amortization of intangible assets		659,558			324,710
Impairments of intangible assets and goodwill		8,179,381			-
Changes in operating assets and liabilities:
Prepayments, receivables and other assets		(52,744	)		1,465,865
Accrued expenses and other liabilities		293,892			43,475
Due to stockholders		(38,475	)		-
Net Cash Used in Operating Activities from Discontinued Operations		-			(793	)
Net Cash (Used in)/Provided by Operating Activities		(813,780	)		1,324,449
Cash Flows from Investing Activities:
Disposal of a subsidiary		-			8,914,833
Purchases of property and equipment		(2,990	)		(1,975	)
Purchases of intangible assets		-			(59,432	)
Consideration paid in a business acquisition		-			(10,099,444	)
Net Cash Used in Investing Activities		(2,990	)		(1,246,018	)
Cash Flows From Financing Activities:
Net Proceeds from issuance of common stock from initial public offering (“IPO”)		9,641,604			-
Proceeds from exercise of underwriter’s over-allotment option		1,411,368			-
Proceeds received from stockholders		830,857			341,736
Repayments to stockholders		(105,630	)		-
Net Cash Provided by Financing Activities		11,778,199			341,736
Effect of Exchange Rate Changes on Cash and cash equivalents		18,845			(259,040	)
Net Increase in cash and cash equivalents		10,980,274			161,127
Cash and cash equivalents at Beginning of Year		161,292			165
Cash and cash equivalents at End of Year	$	11,141,566		$	161,292
Supplemental Cash Flow Information
Cash paid for interest expense	$	-		$	-
Cash paid for income tax	$	-		$	-
Non-cash transaction in investing and financing activities
Unpaid property and equipment purchases	$	4,166		$	-
IPO  issuance costs net against additional paid-in capital	$	1,264,628		$	-
Escrow receivable in connection with IPO	$	1,200,000		$	-
IPO expenses paid by the Company’s stockholders	$	67,277		$	-

The accompanying notes are an integral part of the financial statements

F-6

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND PRINCIPAL ACTITIVIES

Senmiao Technology Limited (“Senmiao” or the “Company”) is a U.S. holding company incorporated in the State of Nevada on June 8, 2017. The Company operates an online lending platform through its variable interest entity (“VIE”), Sichuan Senmiao Ronglian Technology Co., Ltd. (“Sichuan Senmiao”) in China connecting Chinese investors with individual and small- to-medium-sized enterprise (“SME”) borrowers. Through its platform, the Company offers quick and easy access to credit to borrowers and creditors and attractive investment returns for investors. The Company’s executive offices are located in Chengdu, Sichuan province, China.

On July 28, 2017, the Company established a wholly owned subsidiary, Sichuan Senmiao Zecheng Business Consulting Co., Ltd. (“WFOE,” or “Senmiao Consulting”) in China. The Company undertakes substantially all of its business activities in China through WFOE and VIE, Sichuan Senmiao.

Sichuan Senmiao was established in China in June 2014. On September 18, 2017, the Company entered into a series of contractual arrangements with Sichuan Senmiao and its equity holders (“Sichuan Senmiao Shareholders”)through WFOE to obtain control and became the primary beneficiary of Sichuan Senmiao (the “Restructuring”). In connection with the Restructuring, as partial consideration for Sichuan Senmiao Shareholders’commitment to perform their obligations under a series of contractual arrangements, the Company issued an aggregate of 45,000,000 shares of its common stock to Sichuan Senmiao Shareholders pursuant to certain subscription agreements dated September 18, 2017.

On January 29, 2018, the Company’s board of directors and stockholders approved a one-for-two reverse stock split of all issued and outstanding shares of common stock (the “Reverse Stock Split”). As a result, the number of the Company’s issued and outstanding shares of common stock was reduced to 22,500,000 shares. The discussion and presentation of financial statements herein accounted for the Restructuring retroactively as if it occurred on April 1, 2015.

On September 25, 2016, Sichuan Senmiao acquired a peer-to-peer platform (including website, ICP license, operating systems, servers, and management system) from Sichuan Chenghexin Investment and Asset Management Co., Ltd. (“Chenghexin”), who had established and operated the platform for two years prior to the acquisition by Sichuan Senmiao (the “Acquisition”). Prior to the Acquisition, Sichuan Senmiao was a holding company that owned a 60% equity interest in an equity investment fund management company. Sichuan Senmiao sold its 60% equity interest for a cash consideration of RMB 60,000,000 (US$8,914,833) immediately following the Acquisition, in order to focus on the online marketplace lending business.

F-7

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following diagram illustrates the Company’s corporate structure, including its subsidiary and consolidated variable interest entity as of the date of this financial statements: 

 

VIE Agreements with Sichuan Senmiao

According to a series of contractual arrangements (collectively “VIE Agreements”), Sichuan Senmiao is obligated to pay service fees to WFOE equal to the net income of Sichuan Senmiao. Sichuan Senmiao’s operations are, in fact, directly controlled by the Company entirely. There are no unrecognized revenue-producing assets that are held by Sichuan Senmiao.

Each of the VIE Agreements is described in detail below:

Equity Interest Pledge Agreement

WFOE, Sichuan Senmiao and Sichuan Senmiao Shareholders entered into an Equity Interest Pledge Agreement, pursuant to which Sichuan Senmiao Shareholders pledged all of their equity interest in Sichuan Senmiao to WFOE in order to guarantee the performance of Sichuan Senmiao’s obligations under the Exclusive Business Cooperation Agreement as described below. During the term of the pledge, WFOE is entitled to receiving any dividends declared on the pledged equity interest of Senmiao. The Equity Interest Pledge Agreement ends when all contractual obligations under the Exclusive Business Cooperation Agreement have been fully performed.

Exclusive Business Cooperation Agreement

Pursuant to an Exclusive Business Cooperation Agreement by and among the Company, WFOE, Sichuan Senmiao and each of the Sichuan Senmiao Shareholders, WFOE will provide Sichuan Senmiao with complete technical support, business support and related consulting services during the term of the agreement. The Sichuan Senmiao Shareholders and Sichuan Senmiao have agreed not to engage any other party for the same or similar consultation services without WFOE’s prior consent. Further, Sichuan Senmiao Shareholders are entitled to receive an aggregate of 20,250,000 shares of common stock of the Company under the Exclusive Business Cooperation Agreement. The term of the Exclusive Business Cooperation Agreement is 10 years. WFOE may terminate the Exclusive Business Operation Agreement at any time upon prior written notice to Sichuan Senmiao and the Sichuan Senmiao Shareholders.

Exclusive Option Agreement

Pursuant to an Exclusive Option Agreement by and among WFOE, Sichuan Senmiao and each of the Sichuan Senmiao Shareholders, the Sichuan Senmiao Shareholders have granted WFOE an exclusive option to purchase at any time in part or in whole their equity interests in Sichuan Senmiao for a purchase price equal to the capital paid by the Senmiao Shareholders, pro-rated for purchase of less than all the equity interest. The Exclusive Option Agreement terminates in ten years but can be renewed by WOFE at its discretion.

F-8

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Powers of Attorney

Each of the Sichuan Senmiao Shareholders has entered into a power of attorney (the “Power of Attorney”) pursuant to which each of the Sichuan Senmiao Shareholders has authorized WFOE to act on his or her behalf as the exclusive agent and attorney with respect to all rights of such individual as a shareholder, including but not limited to: (a) attending shareholders’ meetings; (b) exercising all the shareholder’s rights, including voting, that shareholders are entitled to under PRC law and the Articles of Association of Sichuan Senmiao, including but not limited to the sale or transfer or pledge or disposition of the equity interests of Sichuan Senmiao owned by such shareholder; and (c) designating and appointing on behalf of the shareholders the legal representative, chairperson, director, supervisor, chief executive officer and other senior management members of Sichuan Senmiao. The Power of Attorney has the same term as the Exclusive Option Agreement.

Timely Report Agreement

The Company and Sichuan Senmiao entered into a timely report agreement pursuant to which Sichuan Senmiao agrees to make its officers and directors available to the Company and promptly provide all information required by the Company so that the Company can make necessary SEC and other regulatory reports in a timely fashion.

The Company has concluded that it is the primary beneficiary of Sichuan Senmiao and should consolidate its financial statements. The Company is the primary beneficiary based on the Power of Attorneys entered into as part of the VIE arrangements that each equity holder of Sichuan Senmiao assigned their rights as a shareholder of Sichuan Senmiao to the WFOE, the Company’s wholly owned subsidiary. These rights include, but are not limited to, attending shareholders’ meetings, voting on matters submitted for shareholder approval and appointing legal representatives, executive directors, supervisors and other senior management members. As such, the Company, through its WFOE, is deemed to hold all of the voting equity interest in Sichuan Senmiao. For the periods presented, the Company has not yet provided any financial or other support to Sichuan Senmiao. However, pursuant to Exclusive Business Cooperation Agreement, the Company may provide complete technical support, business support and related consulting services during the term of the VIE Agreements. Though not explicit in the VIE Agreements, the Company may provide financial support to Sichuan Senmiao to meet its working capital requirements and capitalization purposes. The terms of the VIE Agreements and the Company's plan to provide financial support to the VIE were considered in determining that the Company is the primary beneficiary of the VIE. Accordingly, the financial statements of the VIE are consolidated in the Company's consolidated financial statements.

Total assets and total liabilities of the VIE that were included in the Company’s consolidated financial statements as of March 31, 2018 and 2017 are as follows:

	March 31, 2018		March 31, 2017
Total assets	$	10,425,056	$	10,054,686
Total liabilities	$	1,413,485	$	424,017

As of March 31, 2018 and 2017, the VIE did not hold unrecognized revenue producing assets.

F-9

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Net revenue, net income, operating, investing and financing cash flows of the VIE that were included in the Company's consolidated financial statements for the years ended March 31, 2018 and 2017 are as follows:

	For the Years Ended March 31,
	2018			2017
Net revenue	$	494,897		$	73,237
Net loss	$	(1,473,911	)	$	(596,645	)
Net Cash (Used in) Provided by Operating Activities	$	(718,896	)	$	1,324,449
Net Cash Used in Investing Activities	$	(2,990	)	$	(1,246,018	)
Net Cash Provided by Financing Activities	$	725,227		$	341,736

The Restructuring constituted a reorganization. As all of the above mentioned companies are under common control, this series of transactions account for as a reorganization of entities under common control at carrying value and the consolidated financial statements have been prepared as if the reorganization had occurred retroactively. The consolidated financial statements have been prepared as if the existing corporate structure had been in existence throughout all periods and the reorganization had occurred as of the beginning of the earliest period presented in the accompanying consolidated financial statements.

F-10

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of presentation

The accompanying consolidated financial statements of the Company has been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

(b) Basis of consolidation

The consolidated financial statements include the accounts of the Company and include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries and VIE over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All inter-company accounts and transactions have been eliminated in consolidation. The Company records income attributable to non-controlling interest in the consolidated statements of operations for any non-owned portion of consolidated subsidiaries.

(c) Foreign currency translation

Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency using the applicable exchange rates at the balance sheet dates. The resulting exchange differences are recorded in the statement of operations.

The reporting currency of the Company is the U.S. dollars (“US$”) and the accompanying consolidated financial statements have been expressed in US$. In addition, the Company’s operating subsidiaries maintain their books and records in their respective local currency, Renminbi (“RMB”), which is also the respective functional currency for each subsidiary as they are the primary currency of the economic environment in which each subsidiary operates.

In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the period. The gains and losses resulting from translation of financial statements of a foreign entity are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.

Translation of amounts from RMB into US$ has been made at the following exchange rates for the respective periods:

	March 31, 2018		March 31, 2017
Balance sheet items, except for equity accounts		6.2807		6.8912

	For the Years ended March 31,
	2018		2017
Items in the statements of operations and comprehensive loss, and statements of cash flows		6.6269		6.7304

F-11

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Use of estimates

The preparation of financial statements in conformity with U.S.GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews these estimates and assumptions using the currently available information. Changes in facts and circumstances may cause the Company to revise its estimates. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. The following are some of the areas requiring significant judgments and estimates: determinations of the useful lives of long-lived assets, estimates of allowances for doubtful accounts and valuation assumptions in performing asset impairment tests of long-lived assets and goodwill, and determination of fair value of net identifiable assets in a business acquisition.

(e) Fair values of financial instruments

ASC Topic 825, Financial Instruments (“Topic 825”) requires disclosure of fair value information of financial instruments, whether or not recognized in the balance sheets, for which it is practicable to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments. Topic 825 excludes certain financial instruments and all nonfinancial assets and liabilities from its disclosure requirements. Accordingly, the aggregate fair value amounts do not represent the underlying value of the Company.

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

As of March 31, 2018 and 2017, financial instruments of the Company primarily comprised of cash and cash equivalents, receivables and other assets, escrow receivables, other liabilities and due to stockholders. The financial instruments were carried at cost on the balance sheets, and carrying amounts approximated their fair values because of their generally short maturities and non-interest bearing.

(f) Cash and cash equivalents

Cash and cash equivalents primarily consists of bank deposits with original maturities of three months or less, which are unrestricted as to withdrawal and use.

F-12

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(g) Property and equipment

Property and equipment primarily consists of computer equipment, which is stated at cost less accumulated depreciation less any provision required for impairment in value. Depreciation is computed using the straight-line method with no residual value based on the estimated useful life. The useful life of property and equipment are summarized as follows:

Computer equipment 2 - 3 years

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is considered impaired if its carrying amount exceeds the future net undiscounted cash flows that the asset is expected to generate. If such asset is considered to be impaired, the impairment recognized is the amount by which the carrying amount of the asset, if any, exceeds its fair value determined using a discounted cash flow model. For the years ended March 31, 2018 and 2017, there was no impairment of property and equipment.

Costs of repairs and maintenance are expensed as incurred and asset improvements are capitalized. The cost and related accumulated depreciation of assets disposed of or retired are removed from the accounts, and any resulting gain or loss is reflected in the consolidated income statements.

(h) Intangible assets

On September 25, 2016, Sichuan Senmiao acquired a peer-to-peer platform(including website, ICP license, operating systems, servers, and management system, collectively “Platform”) and relevant employees and users of the Platform from Chenghexin, who had established and operated the Platform for two years prior to the Acquisition. Prior to the Acquisition, Sichuan Senmiao was a holding company that owned a 60% equity interest in an equity investment fund management company. Sichuan Senmiao sold its 60% equity interest for a cash consideration of RMB 60,000,000 (US$8,914,833) immediately following the Acquisition, in order to focus on the online marketplace lending business.

The Acquisition was accounted for under the acquisition method of accounting which required the Company to perform an allocation of the purchase price to the assets acquired. Under the acquisition method of accounting, the total purchase price is allocated to net tangible and intangible assets based on their estimated fair values as of the acquisition date.

Purchased intangible assets are recognized and measured at fair value upon acquisition. Separately identifiable intangible assets that have determinable lives continue to be amortized over their estimated useful lives using the straight-line method as follows:

Platform	7 years
Customer relationship	10 years

Separately identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for identifiable intangible assets is based on the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the years ended March 31, 2018 and 2017, the Company recorded an impairment charge against the Platform in the amount of $2,000,175 and nil, respectively.

F-13

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(i) Business combination

The Company accounted for its business combination using the acquisition method of accounting in accordance with ASC 805 “Business Combinations”. The cost of an acquisition is measured as the aggregate of the acquisition date fair values of the assets transferred and liabilities incurred by the Company to the sellers and equity instruments issued. Transaction costs directly attributable to the acquisition are expensed as incurred. Identifiable assets and liabilities acquired or assumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total costs of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill.

(j) Goodwill

Goodwill represents the excess of the purchase consideration over the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed of the acquired entity or business as a result of the Company’s acquisitions of interests in its subsidiary, VIE and business. Goodwill is not amortized but is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that it might be impaired. The Company first assesses qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. Based on the qualitative assessment, if it is more likely than not that the fair value of each reporting unit is less than the carrying amount, the quantitative impairment test is performed.

In performing the two-step quantitative impairment test, the first step compares the fair values of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the first step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for the purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. Application of a goodwill impairment test requires significant management judgment, including the identification of reporting units, assigning assets, liabilities and goodwill to reporting units, and determining the fair value of each reporting unit.

For the years ended March 31, 2018 and 2017, the Company recorded an impairment charge against goodwill in the amount of $6,179,206 and nil, respectively.

(k) Loss per share

Basic loss per share is computed by dividing net loss attributable to stockholders by the weighted average number of outstanding shares of common stock, adjusted for outstanding shares of common stock that are subject to repurchase.

For the calculation of diluted loss per share, net loss attributable to ordinary stockholders for basic loss per share is adjusted by the effect of dilutive securities, including share-based awards, under the treasury stock method. Potentially dilutive securities, of which the amounts are insignificant, have been excluded from the computation of diluted net loss per share if their inclusion is anti-dilutive.

F-14

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(l) Revenue recognition

The Company recognizes revenue when the following four revenue recognition criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the service has been rendered, (iii) the fees are fixed or determinable, and (iv) collectability is reasonably assured.

During the years ended March 31, 2018 and 2017, the Company generates revenues primarily from service fees in matching investors with borrowers and for the other services provided over the life of a loan.

Borrowers and Creditor Partners — Transaction fees are paid by borrowers and credit partners to the Company for the work the Company performs through its platform. The amount of these fees is based upon the loan amount and other terms of the loan, including credit grade, maturity and other factors. The fees charged to borrowers and creditor partners are paid (i) upon disbursement of the proceeds for loans accruing interest on a monthly basis and (ii) upon full payment of principal and interest of loans accruing interest on a daily basis. These fees are non-refundable upon the issuance of loan.

Investors — The Company charges investors a service fee on their actual investment return. The Company generally receives the service fees upon the investors receiving their investment return. The Company recognizes the revenue when loan was repaid and investor received their investment income.

(m) Selling, general and administrative expenses

Selling, general and administrative expenses primarily consisted of employee salaries and benefit, office rental expense, travel expenses, customer verification and credit assessment costs and platform maintenance cost.

F-15

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(n) Income taxes

The Company accounts for income taxes in accordance with the U.S. GAAP for income taxes. Under the asset and liability method as required by this accounting standard, the recognition of deferred income tax liabilities and assets for the expected future tax consequences of temporary differences between the income tax basis and financial reporting basis of assets and liabilities. Provision for income taxes consists of taxes currently due plus deferred taxes.

The charge for taxation is based on the results for the year as adjusted for items which are non-assessable or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax basis. Deferred tax assets are recognized to the extent that it is probable that taxable income to be utilized with prior net operating loss carried forward. Deferred tax is calculated using tax rates that are expected to apply to the period when the asset is realized or the liability is settled. Deferred tax is charged or credited in the income statement, except when it is related to items credited or charged directly to equity. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Current income taxes are provided for in accordance with the laws of the relevant taxing authorities.

An uncertain tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the period incurred. The Company did not have significant unrecognized uncertain tax positions or any unrecognized liabilities, interest or penalties associated with unrecognized tax benefit as of March 31, 2018 and 2017. As of March 31, 2018, the tax years ended December 31, 2013 through 2017 for the Company’s PRC entities remain open for statutory examination by PRC tax authorities.

(o) Comprehensive income (loss)

Comprehensive income (loss) includes net loss and foreign currency adjustments. Comprehensive income (loss) is reported in the consolidated statements of operations and comprehensive income (loss). Accumulated other comprehensive loss, as presented on the consolidated balance sheets are the cumulative foreign currency translation adjustments. As of March 31, 2018 and 2017, the balance of accumulated other comprehensive loss amounted to $253,761 and $1,107,762, respectively.

F-16

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(p) Leases

Leases are classified as either capital or operating leases. Leases that transfer substantially all the benefits and risks incidental to the ownership of assets are accounted for as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases wherein rental payments are recognized in the consolidated statements of operations on a straight-line basis over the lease terms. The Company had no capital leases for the years ended March 31, 2018 and 2017.

(q) Significant risks and uncertainties

1) Credit risk

Assets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cash equivalents. The maximum exposure of such assets to credit risk is their carrying amount as at the balance sheet dates. As March 31, 2018, approximately $11,000,000 was deposited with a bank in the United States which was insured by the government up to $250,000. At March 31, 2018 and 2017, approximately $180,000 and $161,00, respectively, were primarily deposited in financial institutions located in Mainland China,  which were uninsured by the government authority. To limit exposure to credit risk relating to deposits, the Company primarily place cash deposits with large financial institutions in China which management believes are of high credit quality.

The Company’s operations are carried out in Mainland China. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environments in the PRC as well as by the general state of the PRC’s economy. In addition, the Company’s business may be influenced by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, rates and methods of taxation, and the extraction of mining resources, among other factors.

2) Liquidity risk

The Company is also exposed to liquidity risk which is risk that it is unable to provide sufficient capital resources and liquidity to meet its commitments and business needs. Liquidity risk is controlled by the application of financial position analysis and monitoring procedures. When necessary, the Company will turn to other financial institutions and the stockholders to obtain short-term funding to meet the liquidity requirements.

3) Foreign currency risk

Substantially all of the Company’s operating activities and the Company’s major assets and liabilities are denominated in RMB, except for the cash deposit of approximately $11,000,000 which was in U.S. dollars at March 31, 2018, which is not freely convertible into foreign currencies. All foreign exchange transactions take place either through the Peoples’ Bank of China (“PBOC”) or other authorized financial institutions at exchange rates quoted by PBOC. Approval of foreign currency payments by the PBOC or other regulatory institutions requires submitting a payment application form together with suppliers’ invoices and signed contracts. The value of RMB is subject to changes in central government policies and to international economic and political developments affecting supply and demand in the China Foreign Exchange Trading System market. Where there is a significant change in value of RMB, the gains and losses resulting from translation of financial statements of a foreign subsidiary will be significant affected.

4) VIE risk

It is possible that the VIE Agreements among Sichuan Senmiao, WFOE, and the Sichuan Senmiao Shareholders would not be enforceable in China if PRC government authorities or courts were to find that such contracts contravene PRC laws and regulations or are otherwise not enforceable for public policy reasons. In the event that the Company were unable to enforce these contractual arrangements, the Company would not be able to exert effective control over the VIE. Consequently, the VIE’s results of operations, assets and liabilities would not be included in the Company's consolidated financial statements. If such were the case, the Company's cash flows, financial position, and operating performance would be materially adversely affected. The Company's contractual arrangements with Sichuan Senmiao, WFOE, and the Sichuan Senmiao Shareholders are approved and in place. Management believes that such contracts are enforceable, and considers the possibility remote that PRC regulatory authorities with jurisdiction over the Company's operations and contractual relationships would find the contracts to be unenforceable.

The Company's operations and businesses rely on the operations and businesses of its VIE, which holds certain recognized revenue-producing assets including the Platform, user relationship and goodwill. The VIE also has an assembled workforce, focused primarily on customer verification and credit assessment, whose costs are expensed as incurred. The Company's operations and businesses may be adversely impacted if the Company loses the ability to use and enjoy assets held by its VIE.

F-17

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(r) Recently issued accounting standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). ASU 2014-09 requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. The guidance also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts. The guidance in ASU 2014-09 was effective for annual reporting periods beginning after December 15, 2017 (including interim reporting periods within those periods), which means it became effective for the Company’s fiscal year beginning April 1, 2018. In March 2016, the FASB issued ASU No. 2016-08, “Principal versus Agent Considerations (Reporting Revenue versus Net)” (“ASU 2016-08”), which clarifies the implementation guidance on principal versus agent considerations in the new revenue recognition standard. In April 2016, the FASB issued ASU No. 2016-10, “Identifying Performance Obligations and Licensing” (“ASU 2016-10”), which reduces the complexity when applying the guidance for identifying performance obligations and improves the operability and understandability of the license implementation guidance. In May 2016, the FASB issued ASU No. 2016-12 “Narrow-Scope Improvements and Practical Expedients” (“ASU 2016-12”), which amends the guidance on transition, collectability, noncash consideration and the presentation of sales and other similar taxes. In December 2016, the FASB issued ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers” (“ASU 2016-20”), which makes minor corrections or minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. The amendments are intended to address implementation and provide additional practical expedients to reduce the cost and complexity of applying the new revenue standard. These amendments have the same effective date as the new revenue standard. The Company planned to adopt Topic 606 in the first quarter of its fiscal year beginning April 1, 2018 using the retrospective transition method. The Company’s current revenue recognition policies are generally consistent with the new revenue recognition standards set forth in ASU 2014-09. Potential adjustments to input measures are not expected to be pervasive to the majority of the Company’s contracts. The adoption of this new guidance is not expected to have a material effect on the Company’s consolidated financial statements. The Company will make further assessment at adoption based upon outstanding contracts at that time. In September 2017, the FASB issued Accounting Standards Update (ASU) No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842): Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments.” The amendments in ASU No. 2017-13 amends the early adoption date option for certain companies related to the adoption of ASU No. 2014-09. The Company will adopt using the public company adoption guidance in the related ASUs, as amended. The effective date is the same as the effective date and transition requirements for the amendments for ASU 2014-09 for reporting periods beginning after December 15, 2017.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, to enhance the reporting model for financial instruments to provide users of financial statements with more decision-useful information. The update requires equity investments (except those accounted for under the equity method or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. It eliminated the requirement for public entities to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet. The ASU is effective for the fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this ASU is not expected to have a material effect on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Amendments to the ASC 842 Leases. This update requires the lessee to recognize the assets and liability (the lease liability) arising from operating leases on the balance sheet for the lease term. When measuring assets and liabilities arising from a lease, a lessee (and a lessor) should include payments to be made in optional periods only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. Within twelve months or less lease term, a lessee is permitted to make an accounting policy election not to recognize lease assets and liabilities. If a lessee makes this election, it should recognize lease expense on a straight-line basis over the lease term. In transition, this update will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Management is evaluating the effect, if any, on the Company’s consolidated financial statements.

F-18

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In August 2016, the FASB has issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments provide guidance on the following eight specific cash flow issues: (1) Debt Prepayment or Debt Extinguishment Costs; (2) Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing; (3) Contingent Consideration Payments Made after a Business Combination; (4) Proceeds from the Settlement of Insurance Claims; (5) Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned; (6) Life Insurance Policies; (7) Distributions Received from Equity Method Investees; (8) Beneficial Interests in Securitization Transactions; and Separately Identifiable Cash Flows and Application of the Predominance Principle. The amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable. Management is evaluating the effect, if any, on the Company’s consolidated financial statements. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

On November 22, 2017, the FASB ASU No. 2017-14, “Income Statement—Reporting Comprehensive Income (Topic 220), Revenue Recognition Topic 605), and Revenue from Contracts with Customers (Topic 606): Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 116 and SEC Release 33-10403.” The ASU amends various paragraphs in ASC 220, Income Statement — Reporting Comprehensive Income; ASC 605, Revenue Recognition; and ASC 606, Revenue From Contracts With Customers, that contain SEC guidance. The amendments include superseding ASC 605-10-S25-1 (SAB Topic 13) as a result of SEC Staff Accounting Bulletin No. 116 and adding ASC 606-10-S25-1 as a result of SEC Release No. 33-10403. The Company does not expect that the adoption of this guidance will have a material impact on its consolidated financial statements.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect would have a material effect on the consolidated financial position, statements of operations and cash flows.

3. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

The Company has noted the following errors in relation to its consolidated financial statements for the year ended March 31, 2017 that were included in the Company’s Registration Statement on Form S-1 filed with the Securities Exchange Commission on October 20, 2017, as amended. The errors related to the correction of adjustment of disposal loss arising from discontinued operations and accrual of unpaid employee benefit contributions.

1) Adjustment of disposal loss arising from discontinued operations

Pursuant to ASC 205-20-45-3A, the disposal loss arising from discontinued operations shall be accounted for the results of the discontinued operations. As a result, the Company made an accounting adjustment reflected in the restated consolidated financial statements contained in this Form S-1. As a result, net loss from continuing operations decreased by $64,968, while net loss from discontinued operations increased by $64,986. The accounting adjustment had no impact on the consolidated balance sheet.

2) Accrual of employee benefit contributions

As of March 31, 2017, the Company did not make adequate employee benefit contributions in the amount of $34,437. The Company accrued the amount in accrued payroll and welfare.

F-19

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table sets forth the adjustment to the Company’s results of operations compared to the previously reported consolidated financial statements.

The effects of the restatement on the Company’s consolidated balance sheet as of March 31, 2017 are as follows:

	As at March 31, 2017
	As Previously Reported			Adjustments			As Restated
Accrued expenses and other liabilities	$	55,819		$	34,437		$	90,256
Total Current Liabilities	$	389,580		$	34,437		$	424,017
Accumulated deficit	$	(587,437	)	$	(35,260	)	$	(622,697	)
Accumulated other comprehensive loss	$	(1,108,585	)	$	823		$	(1,107,762	)
Total Stockholders’ Equity	$	9,665,106		$	(34,437	)	$	9,630,669

F-20

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The effects of the restatement on the Company’s consolidated statements of operations and comprehensive income (loss) for the year ended March 31, 2017 are as follows:

	For The Year Ended March 31, 2017
	As Previously Reported			Adjustments			As Restated
Selling, general and administrative expenses	$	(223,512	)	$	(35,260	)	$	(258,772	)
Total operating expenses	$	(548,222	)	$	(35,260	)	$	(583,482	)
Loss from operations	$	(474,985	)	$	(35,260	)	$	(510,245	)
Loss on disposal of a subsidiary	$	(64,968	)	$	64,968		$	—
Total other income	$	(64,492	)	$	64,968		$	476
Loss before income taxes	$	(539,477	)	$	29,708		$	(509,769	)
Net loss from continuing operations	$	(539,477	)	$	29,708		$	(509,769	)
Net (loss)/income from discontinued operations, net of tax	$	(21,908	)	$	(64,968	)	$	(86,876	)
Net Loss	$	(561,385	)	$	(35,260	)	$	(596,645	)
Net loss attributable to Senmiao Technology Limited	$	(552,622	)	$	(35,260	)	$	(587,882	)
Net loss attributable to Senmiao Technology Limited from continuing operation	$	(539,477	)	$	29,708		$	(509,769	)
Net (loss)/income attributable to Senmiao Technology Limited from discontinued operation	$	(13,145	)	$	(64,968	)	$	(78,113	)
Foreign currency translation adjustment	$	(807,847	)	$	823		$	(807,024	)
Comprehensive Loss	$	(1,369,232	)	$	(34,437	)	$	(1,403,669	)
Comprehensive loss attributable to Senmiao Technology Limited	$	(1,155,067	)	$	(34,437	)	$	(1,189,504	)
Comprehensive loss attributable to Senmiao Technology Limited from continuing operation	$	(1,142,014	)	$	(49,704	)	$	(1,191,718	)
Comprehensive (loss)/income attributable to Senmiao Technology Limited from discontinued operation	$	(13,053	)	$	15,267		$	2,214
Earnings per share
Basic and diluted loss for the year attributable to the stockholders of the Company	$	(0.03	)	$	(0.00	)	$	(0.03	)
Earnings per share from continuing operations
Basic and diluted loss from continuing operations attributable to the stockholders of the Company	$	(0.03	)	$	0.00		$	(0.03	)
Earnings per share from discontinued operations
Basic and diluted (loss)/profit from discontinued operations attributable to the stockholder of the Company	$	(0.00	)	$	(0.00	)	$	(0.00	)

F-21

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The effects of the restatement on the Company’s consolidated statements of changes in stockholders’ equity for the year ended March 31, 2017 are as follows:

	Accumulated Deficit as Previously Reported			Accumulated Deficit as Restated			Accumulated other comprehensive Loss as Previously Reported			Accumulated other comprehensive Loss as Restated			Total Equity as Previously Reported			Total Equity as Restated
Net loss	$	(552,622	)	$	(587,882	)	$	—		$	—		$	(561,385	)	$	(596,645	)
Foreign currency translation loss		—			—			(602,445	)		(601,622	)		(807,847	)		(807,024	)
Disposal of a subsidiary		—			—			—			—			(5,986,534	)		(5,986,534	)
Balance as of March 31, 2017	$	(587,437	)	$	(622,697	)	$	(1,108,585	)	$	(1,107,762	)	$	9,665,106		$	9,630,669

The effects of the restatement on the Company’s consolidated statements of cash flows for the year ended March 31, 2017 are as follows:

	For The Year Ended March 31, 2017
	As Previously Reported			Adjustments			As Restated
Net loss from continuing operations	$	(539,477	)		29,708			(509,769	)
Loss on disposal of a subsidiary		64,968			(64,968	)		—
Accrued expenses and other liabilities		7,422			35,260			43,475

F-22

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. ACQUISITION OF LENDING PLATFORM

On September 25, 2016, Sichuan Senmiao completed the acquisition of a peer-to-peer lending business in Chengdu, Sichuan Province. The Company acquired all of the right, title and interest in and to substantially all of the assets associates with the lending business, including the lending platform (consisting of website, ICP license, operating systems, servers, and management system), all its employees, users and computer equipment. Under the terms of the purchase agreement, the seller received an aggregate consideration of RMB 69,690,000 in cash (approximately $10.1 million). The cash consideration was fully funded by the paid-in capital of Sichuan Senmiao and was fully paid in March 2017.

The acquisition cost amounting to $6,163 was recorded in general and administrative expenses when it was incurred.

The acquisition had been accounted for as a business combination and the results of operations of the Platform have been included in the Company’s consolidated financial statements from the acquisition date. The Company made estimates and judgments in determining the fair value of acquired assets and liabilities, based on an independent preliminary valuation report and management’s experiences with similar assets and liabilities. The following table summarizes the estimated fair values for major classes of assets acquired and liabilities assumed at the date of acquisition, using the exchange rate of 6.6714 on that day.

	Fair value
Net tangible assets	$	3,735
Platform		4,230,000
User relationships		395,000
Goodwill		5,817,308
Total purchase consideration	$	10,446,043

F-23

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

4. ACQUISITION OF LENDING PLATFORM (CONTINUED)

The accounting literature establishes guidelines regarding the presentation of this unaudited pro forma information. Therefore, this unaudited pro forma information is not intended to represent, nor does the Company believe it is indicative of, the consolidated results of operations of Senmiao that would have been reported had the acquisition been completed as of April 1, 2016. Furthermore, this unaudited pro forma information does not give effect to the anticipated business and tax synergies of the acquisition and is not representative or indicative of the anticipated future consolidated results of operations of Senmiao.

The unaudited pro forma consolidated financial information reflects the historical results of the peer-to-peer lending business, adjusted to reflect the acquisition had it been completed as of April 1, 2016. The most significant pro forma adjustments to the historical results of operations relate to the application of purchase accounting for the acquisition. The unaudited pro forma financial information includes various assumptions, including those related to the finalization of the purchase price allocation.

UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENTS

FOR THE YEAR ENDED MARCH 31, 2017

	For the Year Ended March 31, 2017
	Senmiao			Acquisition(1)			Acquisition adjustments			Pro Forma Financial Data
	Restated									Restated
Revenues	$	73,237		$	118,534		$	—		$	191,771
Gross revenues		73,237			118,534			—			191,771
Operating expenses
Selling, general and administrative expenses		(258,772	)		(69,806	)		—			(328,578	)
Amortization of intangible assets		(324,710	)		—			(319,074	)(2)		(643,784	)
Total operating expenses		(583,482	)		(69,806	)		(319,074	)		(972,362	)
(Loss)/Income from operations		(510,245	)		48,728			(319,074	)		(780,591	)
Other income
Interest income		30			—			—			30
Other income, net		446			—			—			446
Total other income		476			—			—			476
(Loss)/Income Before Income Taxes		(509,769	)		48,728			(319,074	)		(780,115	)
Income tax recovery/(expense)		—			(12,290	)		12,290	(3)		—
Net (Loss)/Income from continuing operations		(509,769	)		36,438			(306,784	)		(780,115	)
Net loss from discontinued operations		(86,876	)		—			—			(86,876	)
Net (Loss)/Income	$	(596,645	)	$	36,438		$	(306,784	)	$	(866,991	)

(1) The income statement of the Acquisition is for the period from April 1, 2016 to September 25, 2016.

(2) Represents the amortization of the Platform and user relationships which were acquired through the Acquisition. Their estimated useful life is 10 years for user relationship and 7 years for the Platform.

(3) The tax effects of pro forma adjustments have been applied using the statutory rates in effect for the relevant jurisdictions during the period presented.

F-24

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. DISCONTINUED OPERATIONS

During the year ended March 31, 2017, the Company sold its 60% equity interest in Zhongyi Yinfeng Investment Management Co., Ltd. (Zhongyi Yinfeng), to an unrelated third party, for a cash consideration of RMB 60,000,000 (equivalent of   $8.9 million). For disposal transactions that occur on or after April 1, 2015, a component of the Company is reported in discontinued operations after meeting the criteria for held-for-sale classification if the disposition represents a strategic shift that has (or will have) a major effect on the Company’s operations and financial results. The Company analyzed the quantitative and qualitative factors relevant to the disposal of equity interest in Zhongyi Yinfeng and determined the criteria for held-for-sale classification have been met, and the transaction represents a strategic shift where the Company is exiting the private equity investment, which will have a major effect on the Company’s operations and financial results going forward. As such, the financial results of Zhongyi Yinfeng are reported as discontinued operations in the consolidated financial statements. The consolidated financial statements and amounts previously reported have been reclassified, as necessary, to allow for meaningful comparison of continuing operations.

As of September 30, 2016, the date of completion of the disposal, the net asset of Zhongyi Yinfeng amounted to approximately $15.0 million and the non-controlling interest amounted to approximately $6.0 million. As a result, the Company recorded a loss of $64,968 on the sale of Zhongyi Yinfeng, in which the Company held a 60% equity interest.

The transaction qualified to be presented as discontinued operations as it met the criterion of 1) the disposed subsidiary is a component of an entity; 2) the subsidiary was disposed of by sale, and 3) the disposal represents a strategic shift that has a major effect on an entity’s operations and financial results.

Results of the discontinued operations are summarized as follows:

	For the six months ended September 30, 2016			For the year ended March 31, 2016
	(Restated)
Sales	$	12,936		$	88,992
General and administrative expenses		(35,088	)		(92,760	)
Other income		244			8,970
Income tax expense		—			(753	)
Loss on disposal of a subsidiary		(64,968	)		—
Net (loss)/income from discontinued operations	$	(86,876	)	$	4,449

The following table summarizes the carrying amounts of the major classes of assets and liabilities held for sale in the consolidated balance sheets as of September 30, 2016 and March 31, 2016, respectively:

	September 30, 2016		March 31, 2016
Cash and cash equivalents	$	1,084	$	1,948
Due from related parties		9,270,711		9,864,099
Other current assets		7,511,162		7,768,428
Long-term investment		2,248,801		2,325,816
Assets of disposal group classified as held for sale	$	19,031,758	$	19,960,291
Due to related parties	$	3,930,649	$	4,415,346
Other current liabilities		134,774		43,197

F-25

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5. DISCONTINUED OPERATIONS (CONTINUED)

	September 30, 2016		March 31, 2016
Liabilities directly associated with the assets classified as held for sale	$	4,065,423	$	4,458,543
Non-controlling interest in net assets of discontinued operation	$	5,986,534
Company’s interest in net assets of discontinued operation		8,979,801
Less: Cash consideration received from disposal of the subsidiary		8,914,833
Loss on disposal of a subsidiary	$	64,968

During the year ended March 31, 2016, the Company did not incur significant divestures.

6. PREPAYMENTS, RECEIVABLES AND OTHER ASSETS

As of March 31, 2018 and 2017, prepayments, receivables and other assets consisted of the following:

	March 31, 2018		March 31, 2017
Loans to employees	$	2,718	$	8,654
Prepaid expenses		44,861		6,961
Advance to a supplier		-		3,309
Others		22,842		552
	$	70,421	$	19,476

7. PROPERTY AND EQUIPEMENT, NET

The Company’s property and equipment are recorded at cost less accumulated depreciation. Depreciation expenses are calculated using straight-line method over the estimated useful life with no salvage value.

Property and equipment consist of the following:

	March 31, 2018			March 31, 2017
Computer equipment	$	13,680		$	5,587
Less: accumulated depreciation		(4,808	)		(939	)
	$	8,872		$	4,648

Depreciation expense totaled $3,580 and $961 for the years ended March 31, 2018 and 2017, respectively.

F-26

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. INTANGIBLE ASSETS, NET AND GOODWILL

As of March 31, 2018 and 2017, the intangible assets consisted of user relationship, platform and software.

	Useful life	March 31, 2018			March 31, 2017
User relationship	10	$	419,573		$	382,405
Platform	7		4,493,151			4,095,124
Software	7		84,545			77,055
			4,997,269			4,559,584
Less: accumulated amortization			(1,043,871	)		(317,133	)
impairment			(2,000,175	)		-
		$	1,953,223		$	4,237,451

Amortization expense totaled $659,558 and $324,710 for the years ended March 31, 2018 and 2017, respectively.

The following table sets forth the Company’s amortization expenses for the five years since March 31, 2018:

	Amortization expenses
Year ending March 31, 2019	$	320,149
Year ending March 31, 2020		320,149
Year ending March 31, 2021		320,149
Year ending March 31, 2022		320,149
Year ending March 31, 2023 and thereafter		672,627
	$	1,953,223

As of March 31, 2018 and 2017, the goodwill is as follows:

	March 31, 2018			March 31, 2017
Goodwill	$	6,179,206		$	5,631,819
Less: impairment		(6,179,206	)		-
	$	-		$	5,631,819

9. ACCRUED EXPENSES AND OTHER LIABILITIES

	March 31, 2018		March 31, 2017
Other payable	$	194,943	$	19,010
Accrued payroll and welfare		195,695		68,976
Other tax payable		5,471		2,270
Customer deposit		8,495		-
	$	404,604	$	90,256

The balance of other payable represented amount due to suppliers and vendors.

F-27

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. EMPLOYEE BENEFIT PLAN

The Company has made employee benefit contribution in accordance with relevant Chinese regulations, including retirement insurance, unemployment insurance, medical insurance, housing fund, work injury insurance and maternity insurance. The Company recorded the contribution in the salary and employee charges when incurred. The contributions made by the Company were $37,136 and $6,706 for the years ended March 31, 2018 and 2017, respectively.

As of March 31, 2018 and 2017, the Company did not make adequate employee benefit contributions in the amount of $150,205 and $34,437. The Company accrued the amount in accrued payroll and welfare.

11. stockholders’ equity

Common Stock

The Company is authorized to issue 100,000,000 shares of $0.0001 par value common stock. On September 18, 2017, the Company issued 45,000,000 shares of common stock to Sichuan Senmiao Shareholders.

On January 29, 2018, the Company’s board of directors and stockholders approved a one-for-two reverse stock split of its issued and outstanding shares of common stock. As such, the Company’s total issued and outstanding shares became 22,500,000 share immediately following the reverse stock split. In connection with reverse stock split, all shares and per share amounts have been retroactively restated as if it occurred on April 1, 2015.

On March 16, 2018, the Company closed its initial public offering of 3,000,000 shares of common stock. On March 28, 2018, the Company sold additional 379,400 shares of common stock from the exercise of the underwriter’s over-allotment option. The public offering price of the shares sold in the initial public offering was $4.00 per share. The total gross proceeds from the offering were approximately $13.5 million. After deducting underwriting discounts and commissions and offering expenses payable by the Company, the aggregate net proceeds received by the Company totaled approximately $12.2 million.

Warrants

The registration statement relating to the Company’s initial public offering also covered the underwriter’s common stock purchase warrants to purchase 337,940 shares of common stock. Each five-year warrant entitles warrant holder to purchase the Company’s common stock at the price of $4.80 per share and is not exercisable for a period of 180 days from March 16, 2018.

12. INCOME TAXES

The United States of America

The Company is incorporated in the State of Nevada in the U.S., and is subject to U.S. federal corporate income taxes. The State of Nevada does not impose any state corporate income tax.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Act”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a U.S. corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017, the transition of U.S international taxation from a worldwide tax system to a territorial system, and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017. As the Company has a March 31 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of approximately 31.5% for its fiscal year ending March 31, 2018, and 21% for subsequent fiscal years. Accordingly, the Company has to remeasure it deferred tax assets on net operating loss carryforward in the U.S and concluded no effect on the Company’s income tax expenses as the Company has no deferred tax assets generated since inception.

Additionally, the Tax Act imposes a one-time transition tax on deemed repatriation of historical earnings of foreign subsidiaries, and future foreign earnings are subject to U.S. taxation. The change in rate has caused the Company to remeasure all U.S. deferred income tax assets and liabilities for temporary differences and NOL carryforwards and recorded one time income tax payable to be paid in 8 years. However, this one-time transition tax has no effect on the Company’s income tax expenses as the Company has no undistributed foreign earnings prior to March 31, 2018, as the Company has cumulative foreign losses as of March 31, 2018.

The Company's net operating loss for the year ended March 31, 2018 amounted to approximately $0.2 million. As of March 31, 2018, the Company’s net operating loss carry forward for United States income taxes was approximately $0.2 million. The net operating loss carry forwards are available to reduce future years' taxable income through year 2037. Management believes that the realization of the benefit from this loss appears uncertain due to the Company's operating history. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset to reduce the deferred tax assets to zero. As of March 31, 2018 and 2017, valuation allowance for deferred tax assets was approximately $0.04 million and nil, respectively. Management reviews this valuation allowance periodically and makes changes accordingly

F-28

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. INCOME TAXES (CONTINUED)

PRC

The WFOE and Sichuan Senmiao are subject to PRC Enterprise Income Tax (“EIT”) on the taxable income in accordance with the relevant PRC income tax laws. The EIT rate for companies operating in the PRC is 25%.

Income taxes that are attributed to the continuing operations in the PRC are consist of:

	For the Years Ended March 31
	2018		2017
Current income tax expense	$	-	$	-
Deferred income tax benefit		-		-
Deferred income tax benefit
	$	-	$	-

As of March 31, 2018 and 2017, the Company had net operating loss carryforwards of $1,512,341 and $527,498, which will expire in 2023 and 2022, respectively. The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized. At March 31, 2018 and 2017, full valuation allowance is provided against the deferred tax assets based upon management’s assessment as to their realization.

The tax effects of temporary differences from continuing operations that give rise to the Company’s deferred tax assets are as follows:

	March 31,			March 31,
	2018			2017
Net operating loss carryforwards in the PRC	$	378,085		$	131,874
Net operating loss carryforwards in the U.S.		43,021			-
Less: valuation allowance		(421,117	)		(131,874	)
	$	-		$	-

The Company evaluates its valuation allowance requirements at end of each reporting period by reviewing all available evidence, both positive and negative, and considering whether, based on the weight of that evidence, a valuation allowance is needed. When circumstances cause a change in management’s judgement about the realizability of deferred tax assets, the impact of the change on the valuation allowance is generally reflected in income from operations. The future realization of the tax benefit of an existing deductible temporary difference ultimately depends on the existence of sufficient taxable income of the appropriate character within the carryforward period available under applicable tax law.

F-29

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

12. INCOME TAXES (CONTINUED)

Below is a reconciliation of the statutory tax rate to the effective tax rate:

	For the Years Ended March 31,
	2018			2017
PRC statutory tax rate	$	25.0	%	$	25.0	%
Effect of income tax rate difference in other jurisdiction		(0.1	)%		-
Effect of non-deductible impairments for intangibles and goodwill		(22.5	)%		-
Effects of valuation allowance on deferred income tax asset		(2.4	)%		(25.0	)%
PRC statutory tax rate	$	0	%	$	0	%

F-30

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13. RELATED PARTY TRANSACTIONS AND BALANCES

1) Due to stockholders

As of March 31, 2018 and 2017, the balance of due to stockholders was as follows:

	March 31, 2018		March 31, 2017
Jun Wang	$	114,595	$	43,534
Xiang Hu		945,824		290,227
Hong Li		30,389		-
	$	1.090,808	$	333,761

The balances due to Jun Wang and Xiang Hu are unsecured borrowings.

The balance due to Hong Li is payable on demand.

2) Related party transactions

In December 2017, the Company entered into loan agreements with Xiang Hu and Jun Wang, who agreed to grant a line of credit of approximating $955,308 and $159,218, respectively, for five years to the Company. The line of credit was non-interest bearing, effective from January 2017. During the year ended March 31, 2018, the Company borrowed from Hu Xiang and Jun Wang, the stockholders of the Company and Sichuan Senmiao, in the amount of $690,370 and $74,832, respectively. These borrowings were non-interest bearing and without specific terms of repayment.

During the year ended March 31, 2018, the Company paid listing expenses on behalf of Xiang Hu and Jun Wang who agreed to pay part of the Company’s expenses in connection with its initial public offering, in the amount of $59,692 and $7,585, respectively. The Company accounted for the expenses as a deduction against the amount due from the stockholders.

During the year ended March 31, 2017, the Company entered into two office lease agreements with Hong Li, both with a term from January 1, 2017 to January 1, 2020. For the year ended March 31, 2018, the Company paid $86,405 of rental expenses to Hong Li.

F-31

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. COMMITMENTS AND CONTINGENCIES

1) Lease Commitments

During the year ended March 31, 2018, the Company leased its offices and three apartments under five lease agreements expiring through January 2020. Rental expenses for the years ended March 31, 2018 and 2017 were $122,741 and $28,359, respectively. The following table sets forth the Company’s contractual obligations as of March 31, 2018 in future periods:

	Rental payments
Year ending March 31, 2019	$	137,304
Year ending March 31, 2020		97,855
Year ending March 31, 2021 and thereafter		-
	$	235,159

F-32

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15. PARENT-ONLY FINANCIALS

SENMIAO TECHNOLOGY LIMITED

CONDENSED BALANCE SHEETS

	March 31,			March 31,
	2018			2017
ASSETS
Current Assets
Cash and cash equivalents	$	10,961,071		$	-
Prepayments, receivables and other assets		39,964			-
Total Current Assets		11,001,035			-
Other Assets
Escrow receivable		1,200,000			-
Investment in subsidiary		830,562			-
Total Assets	$	13,031,597		$	-
LIABILITIES AND STOCKHOLDERS’ EQUITY
Total Liabilities	$	152,927		$	-
Stockholders' Equity
Common stock (par value $0.0001 per share, 100,000,000 shares authorized; 25,879,400 and 20,250,000 shares issued and outstanding at March 31, 2018 and March 31, 2017, respectively)		2,588			2,025
Additional paid-in capital		23,611,512			(2,025	)
Accumulated deficit		(10,481,669	)		-
Accumulated other comprehensive loss		(253,761	)		-
Total Stockholders’ Equity		12,878,670			-
Total Liabilities and Stockholders’ Equity	$	13,031,597		$	-

F-33

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SENMIAO TECHNOLOGY LIMITED

CONDENSED STATEMENTS OF OPERATIONS

	For the Years Ended March 31,
	2018			2017
General and administrative expenses	$	(204,864	)	$	-
Equity of loss in subsidiary		(9,654,108	)		-
Net loss		(9,858,972	)		-
Foreign currency translation adjustments		854,001			-
Comprehensive loss	$	(9,004,971	)	$	-

SENMIAO TECHNOLOGY LIMITED

CONDENSED STATEMENTS OF CASH FLOWS

	For the Years ended March 31,
	2018			2017
Cash Flows from Operating Activities
Net loss	$	(9,858,972	)	$	-
Adjustments to reconcile net loss to net cash used in operating activities:					-
Equity of loss of subsidiaries		9,654,108			-
Changes in operating assets and liabilities:
Prepayments, receivables and other assets		(39,964	)		-
Accrued expenses and other liabilities		81,927			-
Due to stockholders		71,000			-
Cash Flows used in Operating Activities		(91,901	)		-
Cash Flows From Financing Activities:
Net Proceeds from issuance of common stock in initial public offering		9,641,604			-
Proceeds from exercise of the underwriter’s overallotment option		1,411,368			-
Cash Flows provided by Financing Activities		11,052,972			-
Net increase in cash and cash equivalents		10,961,071			-
Cash and cash equivalents, beginning of year		-			-
Cash and cash equivalents, end of year	$	10,961,071		$	-
Supplemental Cash Flows Information:
Income tax paid	$	-		$	-
Interest paid	$	-		$	-
Non-cash investing and financing activities:
IPO issuance costs net against additional paid-in capital	$	1,264,628		$	-
Escrow receivable in connection with IPO	$	1,200,000		$	-
IPO expenses paid by the Company’s stockholders	$	67,277		$

F-34

SENMIAO TECHNOLOGY LIMITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(a) Basis of presentation

The condensed financial information of Senmiao Technology Limited, has been prepared using the same accounting policies as set out in the consolidated financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted by reference to the consolidated financial statements.

(b) Investment in subsidiary and equity of loss in subsidiaries

The investment in subsidiary consists of investments in WFOE and VIE. The equity of loss in subsidiary consists of equity of loss in WFOE and VIE.

(c) Stockholders’ equity

On September 18, 2017, the Company issued an aggregate of 45,000,000 shares of common stock to Sichuan Senmiao Shareholders. The Company recorded $4,500 for the issuance of the shares.

On January 29, 2018, the Company’s board of directors and stockholders approved a one-for-two reverse stock split of its issued and outstanding shares of common stock.

On March 16, 2018, the Company closed its initial public offering of 3,000,000 shares of common stock. On March 28, the Company sold additional 379,400 shares of common stock upon exercise of the underwriter’s over-allotment option. The public offering price of the shares sold in the initial public offering was $4.00 per share. The total gross proceeds from the offering were approximately $13.5 million. After deducting underwriting discounts and commissions and offering expenses payable by the Company, the aggregate net proceeds received by the Company totaled approximately $12.2 million.

Warrants

The registration statement relating to the Company’s initial public offering also covered the underwriter’s common stock purchase warrants to purchase 337,940 shares of common stock. Each five-year warrant entitles the warrant holder to purchase the Company’s common stock at the price of $4.80 per share and is not exercisable for a period of 180 days from March 16, 2018.

F-35

PART IV

Item 15. Exhibits, Financial Statement Schedules

(a)	The following documents are filed as part of this Report:
	(1)	Financial Statements
	(2)	Financial Statements Schedule

All financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial statements and notes thereto in is Item 15 of Part IV below.

(3) Exhibits

 We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected and copied at the public reference facilities maintained by the SEC, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Copies of such material can also be obtained from the Public Reference Section of the SEC, 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates or on the SEC website at www.sec.gov.

5 

EXHIBIT INDEX

Exhibit  No.	Description
3.1	Articles of Incorporation of the Company, incorporated herein by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
3.2	Certificate of Amendment to Articles of Incorporation of the Company, incorporated herein by reference to Exhibit 3.2 to the Amendment No.3 to Registration Statement on Form S-1 filed with the SEC on January 30, 2018
3.3	Bylaws of the Company, incorporated herein by reference to Exhibit 3.2 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.1	Exclusive Business Cooperation Agreement, dated September 18, 2017, by and between Sichuan Senmiao Zecheng Business Consulting Co., Ltd. and Sichuan Senmiao Ronglian Technology Co., Ltd., incorporated herein by reference to Exhibit 10.1 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.2	Form of Equity Interest Pledge Agreement by and among Sichuan Senmiao Zecheng Business Consulting Co., Ltd., Sichuan Senmiao Ronglian Technology Co., Ltd. and each equity holder of Sichuan Senmiao Ronglian Technology Co., Ltd., incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.3	Exclusive Option Agreement, dated September 18, 2017, by and among Sichuan Senmiao Zecheng Business Consulting Co., Ltd., Sichuan Senmiao Ronglian Technology Co., Ltd. and each equity holder of Sichuan Senmiao Ronglian Technology Co., Ltd., incorporated herein by reference to Exhibit 10.3 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.4	Form of Power of Attorney, incorporated herein by reference to Exhibit 10.4 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.5	Timely Reporting Agreement, dated September 18, 2017, by and between Sichuan Senmiao Ronglian Technology Co., Ltd. and the Company, incorporated herein by reference to Exhibit 10.5 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.6	Form of Financial Intermediary Service Contract, incorporated herein by reference to Exhibit 10.6 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.7	System Integrating Agreement, dated December 7, 2016, by and between the Company and Guangdong Huaxing Bank Co., Ltd., incorporated herein by reference to Exhibit 10.7 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017

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10.8	Individual Network Lending Institution Clients Fund Depository Business Cooperation Agreement, dated February 23, 2017, by and between the Company and Guangdong Huaxing Bank Co., Ltd., incorporated herein by reference to Exhibit 10.8 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.9	Internet Financial Platform Transfer Agreement, dated September 23, 2016, by and between the Company and Sichuan Cheng He Xin Investment Financing Information Consultation Co., Ltd., incorporated herein by reference to Exhibit 10.9 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.10	Supplementary to Internet Financial Platform Transfer Agreement, dated March 26, 2017, by and between the Company and Sichuan Cheng He Xin Investment Financing Information Consultation Co., Ltd., incorporated herein by reference to Exhibit 10.10 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.11	Lease Agreement, dated December 29, 2016, by and among the Company, Xiaodong Yang and Hong Li, incorporated herein by reference to Exhibit 10.11 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.12	Supplemental Lease Agreement, dated January 1, 2017, by and among the Company, Xiaodong Yang and Hong Li, incorporated herein by reference to Exhibit 10.12 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.13	Form of Loan Assignment and Repurchase Agreement, incorporated herein by reference to Exhibit 10.13 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.14	Form of Loan and Security Agreement, incorporated herein by reference to Exhibit 10.14 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.15	Strategic Cooperation Framework Agreement, dated March 18, 2017, by and between the Company and Resgreen Health Science & Technology Group Co., Ltd., incorporated herein by reference to Exhibit 10.15 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.16	Employment Agreement between the Company and Xin Chen, incorporated herein by reference to Exhibit 10.16 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.17	Employment Agreement between the Company and Rong Zhu, incorporated herein by reference to Exhibit 10.17 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.18	Employment Agreement between the Company and Chunhai Li, incorporated herein by reference to Exhibit 10.18 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017

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10.19	Form of Director Offer Letter, incorporated herein by reference to Exhibit 10.19 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
10.22	Loan Agreement, effective January 1, 2017, by and between Xiang Hu and Sichuan Senmiao Ronglian Technology Co., Ltd., incorporated herein by reference to Exhibit 10.22 to the Amendment No.4 to Registration Statement on Form S-1 filed with the SEC on February 13, 2018
10.23	Loan Agreement, effective January 1, 2017, by and between Jun Wang and Sichuan Senmiao Ronglian Technology Co., Ltd., incorporated herein by reference to Exhibit 10.23 to the Amendment No.4 to Registration Statement on Form S-1 filed with the SEC on February 13, 2018
10.24	Fund Deposit Service Agreement dated April 8, 2018, by and between Senmiao Technology Limited and Sichuan XW Bank Co., Ltd., incorporated herein by reference to Exhibit 10.1 to Current Report on Form 8-K filed with the SEC on April 12, 2018
14.1	Code of Ethics, incorporated herein by reference to Exhibit 14.1 to the Amendment No.2 to Registration Statement on Form S-1 filed with the SEC on December 29, 2017
21.1	List of Subsidiaries, incorporated herein by reference to Exhibit 21.1 to the Registration Statement on Form S-1 filed with the SEC on October 30, 2017
31.1	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification of Principal Executive Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
32.2	Certification of Principal Financial Officer, pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**

* Filed herewith

** Furnished herewith

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this Amendment No.1 to the Annual Report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 19, 2019	SENMIAO TECHNOLOGY LIMITED
	By:	/s/ Xi Wen
	Xi Wen
	Chairman of the Board, President, Chief Executive Officer and Secretary
	(Principal Executive Officer)

By:	/s/ Xiaoyuan Zhang
Xiaoyuan Zhang
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this Amendment No.1 to the Annual Report on Form 10-K/A has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Xi Wen	Chairman of the Board, President, Chief	March 19, 2019
Xi Wen	Executive Officer and Secretary (Principal Executive Officer)
/s/ Xiaoyuan Zhang	Chief Financial Officer and Treasurer	March 19, 2019
Xiaoyuan Zhang	(Principal Financial and Accounting Officer)
/s/ Trent D. Davis	Director	March 19, 2019
Trent D. Davis
/s/ Xiaojuan Lin	Director	March 19, 2019
Xiaojuan Lin
/s/ Sichun Wang	Director	March 19, 2019
Sichun Wang
/s/ Jie Gao	Director	March 19, 2019
Jie Gao

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